By Stephanie Brown Cripps and Weronika Bukowski
On December 20, 2017, President Trump took a significant step in a growing movement to counter human rights abuses with economic sanctions. He issued an executive order (the Order), accompanied by a US asset freeze and visa ban, on a number of individuals and entities across the globe for human rights violations.
The Order makes effective the 2016 Global Magnitsky Human Rights Accountability Act (the Act). Now individuals anywhere in the world who engage in corruption or gross human rights violations can be added to the US list of Special Designated Nationals (SDN list).
The Act follows an earlier version of the law passed in 2012 that applied only to human rights violations in Russia. Estonia, the United Kingdom, and Canada have passed their own versions of the Act, and Lithuania, Norway, and the European Union are considering similar legislation. There is a clear momentum among nations to impose human rights related sanctions. Nevertheless, questions remained as to when, or even whether, the Act would be implemented in the United States.
In a letter to Congress dated April 20, 2017, President Trump pledged a commitment to the “robust and thorough enforcement” of the Global Magnitsky Act, and claimed that his administration is “actively identifying” individuals and entities to be sanctioned. The Trump Administration followed through on December 20, 2017, when it issued the Order and added a number of individuals and entities to the SDN list. Thus far, 15 individuals and 37 entities have been designated for alleged human rights abuses and corruption pursuant to the Order. Major General Maung Maung Soe, involved in the ongoing deadly actions on the Rohingya ethnic Muslim Group in Myanmar; Yahya Jammeh, the former president of Gambia; and five Russian nationals are among those who have been designated.
The consequences of being designated pursuant to the Order can be severe: the US assets of a designated person are blocked (or frozen), and US persons within or outside the United States generally can have no dealings with a designated person. The Order’s scope reaches beyond individuals or entities that commit human rights abuses to impose potential sanctions on government officials, and those acting on behalf of those officials, who are “responsible for or complicit in corruption,” including the “misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.” Further, any individual who materially assists in any of the sanctionable activities under the Order may also be added to the SDN list.
The Act is a crossover between anti-bribery and corruption and sanctions law. Companies familiar with the liability risks associated with the Foreign Corrupt Practices Act (FCPA) and Alien Tort Statute should now consider the potential risks associated with the Act. While violating the FCPA can lead to civil and criminal penalties, the penalties under the Global Magnitsky Act could potentially be more severe: designated persons would be completely shut out of the US financial system, with little or no notice.
The Order is not the first human-rights related sanctions program to be implemented by the United States. One of the executive orders President Obama signed in 2011 blocked the property of persons who committed certain human rights abuses in Syria. President Obama also signed an executive order in 2012 targeting human rights abuses by the governments of Iran and Syria facilitated by computer and network disruption, monitoring, and tracking. However, these earlier human rights sanctions were relatively narrow in scope compared to the Order.
The Order was the second round of new human rights sanctions implemented last year. The Countering America’s Adversaries through Sanctions Act (CAATSA), enacted in August 2017, provides for sanctions on individuals and entities engaged in human rights abuses in Iran, North Korea, and Russia. Although these aspects of CAATSA have yet to be implemented by executive order, they illustrate the growing trend of using sanctions as a tool against human rights violations. Even more recently, on January 12, 2018, OFAC designated 14 individuals and entities in Iran in connection with serious human rights abuses, support to designated weapons proliferators, and censorship. With this growing momentum, we expect to see further sanctions related to human rights abuses rolled out as the year continues.
